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There are various types of investment professionals. And the products and services each type canor cannotprovide will depend on the license(s) and training the person or firm has.
As you consider a particular person or firmor as you construct a team to help youheres what you need to know aboutbrokers.
While many people use the word broker generically to describe someone who handles stock transactions, the legal definition is somewhat differentand worth knowing. A broker-dealer is a person or company that is in the business of buying and selling securitiesstocks, bonds, mutual funds, and certain other investment productson behalf of its customers (as broker), for its own account (as dealer), or both. Individuals who work for broker-dealersthe sales personnel whom most people call brokersare technically known as registered representatives.
With few exceptions, broker-dealers must register with the Securities and Exchange Commission (SEC) and be members of FINRA. Individual registered representatives must register with FINRA, pass a qualifying examination, and be licensed by your state securities regulator before they can do business with you. You can obtain background information on broker-dealers and registered representativesincluding registration, licensing, and disciplinary historyby usingFINRA BrokerCheckor calling us toll-free (800) 289-9999. You can also contact your state securities regulator. To find your regulator, check the government listing of your phone book or contact the North American Securities Administrators Association at (202) 737-0900.
Broker-dealers vary widely in the types of services they offer, falling generally into two categoriesfull-service and discount brokerage firms. Full-service firms typically charge more for each transaction, but they tend to have large research operations that representatives can tap into when making recommendations, can handle nearly any kind of financial transaction you want to make, and may offer investment planning or other services. Discount broker-dealer firms are usually cheaper, but you may have to research potential investments on your ownthough the broker-dealer websites may have a lot of information you can use. Registered representatives are primarily securities salespeople and may also go by such generic titles as financial consultant, financial advisor, or investment consultant. The products they can sell you depend on the licenses they hold. For example, a representative who has passed the Series 6 exam can sell only mutual funds, variable annuities, and similar products, while the holder of a Series 7 license can sell a broader array of securities. When a registered representative suggests that you buy or sell a particular security, he or she must have reason to believe that the recommendation is suitable for you based on a host of factors, including your income, portfolio, and overall financial situation, your tolerance for risk, and your stated investment objectives.
This publication explains what to expect if you do decide to open a brokerage account, including what information you will be asked to provide, what decisions you will be asked to make, what questions you should ask your broker and what your rights are as a customer of a brokerage firm.
Tips for Working With Your Investment Professional
Investor Complaint CenterFile a complaint about fraud or unfair practices.
Whistleblower Tip-Line866-96-FINRA or[emailprotected]
Small Firm Helpline833-26-FINRA () (M to F 9-5 ET)
Office of the OmbudsmanReport a concern about FINRA. (888) 700-0028
File a Regulatory TipTo report on abuse or fraud in the industry.